Arcelor is offering C$71 a share, 4.4 percent more than ThyssenKrupp's bid on Saturday of C$68, Arcelor said today in a statement. ThyssenKrupp has until next Monday to match the bid, Dofasco said yesterday. Dofasco shares were at C$33.35 before the first offer was made on May 27 and were at C$65.80 last Friday.

Both Dusseldorf-based ThyssenKrupp and Luxembourg-based Arcelor are vying for a slice of the North American automotive-steel market, competing with Mittal Steel Co, the world's biggest steelmaker. Dofasco, which supplies steel to about 10 percent of the North American auto market, counts Ford Motor Co among its customers.

"It boils down to how badly people want this asset," Stephen Pope, head of equity research at Cantor Fitzgerald LP in London, said in an interview today. "The view seems to be that Arcelor desperately need it to boost their strength in the North American car market and keep Mittal in sight."

Arcelor's shares fell as much as 29 cents, or 1.3 percent, to 21.62 euros as of 9:04am in Paris. ThyssenKrupp shares dropped 15 cents, or 0.6 percent, to 18.86 euros in Frankfurt.

Mittal Steel, owned by billionaire Lakshmi Mittal, became the No. 1 steel producer in North America when it paid US$4.5 billion for Cleveland, Ohio-based International Steel Group from financier Wilbur Ross in April last year.

Toyota Motor Corp plans to build a new plant in Woodstock, less than 80km away from Dofasco's steelworks in Hamilton, on the shore of Lake Ontario.

ThyssenKrupp today said it hasn't yet decided whether it will match Arcelor's bid. If it does, the German company gets a C$215 million break-up fee.

This is Arcelor's seventh consecutive bid for Dofasco. The first four were made jointly with Nucor Corp, the second- largest US steelmaker. They made an initial cash offer of C$43 on May 27, according to Arcelor's regulatory filings.

Arcelor missed out on acquisitions last year, losing to Rotterdam-based Mittal in an auction for Ukraine's Kryvorizhstal on Oct. 24 and failing to buy Turkey's Erdemir in an auction Oct. 4 that was won by Ordu Yardimlasma Kurumu, a local pension fund. Arcelor later agreed to buy a 20 percent stake in Erdemir from the pension fund.

A purchase by ThyssenKrupp would be its biggest since it was formed from the merger of Thyssen AG and Fried. Krupp AG Hoesch-Krupp in 1999.

Iron ore rose to a record last year and may gain another 12 percent in the year starting April 1, according to the median estimate of 10 analysts and money managers in a Bloomberg survey.

"You've got to think of the value of the iron ore business," said Michelle Applebaum, an independent researcher in Chicago Highland Park, Illinois who has followed the steel industry for nearly 25 years. She forecasts iron-ore prices may gain as much as 20 percent this year.

UBS AG and Merrill Lynch & Co Inc are advising Arcelor on its bid for Dofasco.

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